Letter: Protecting the FTC from Special Interest Attacks

Last updated: 7/8/2016

While much of our work lately has been in defense of the Consumer Financial Protection Bureau (CFPB), we also support the efforts of the over-100 year old Federal Trade Commission. Recently, powerful special interests convinced the Energy and Commerce Committee to draft (and expect it to vote out in July) legislation to severely weaken the FTC's ability to protect the public from identity theft and privacy invasions (including sloppy data security that leads to identity theft), deceptive health marketing claims by sellers of various dangerous or ineffective (or both) products and numerous other last-dollar and other frauds and schemes. Through our national office, U.S. PIRG, we've joined over 30 leading groups (including the Consumer Federation of America and Consumers Union) in a letter (attached below) opposing the so-called FTC Process and Transparency Reform Act of 2016 (HR 5510-Burgess (TX)).

Excerpt from our letter:

"We are very concerned that the legislation would harm the FTC’s ability to crack down on scam artists and protect consumers from unfair, misleading, or anticompetitive business practices. [...] The FTC’s work to promote competition and protect consumers from unfair or deceptive acts or practices is essential to the fair functioning of the marketplace. For over a century, the agency has stood up for the interests of consumers when threatened by unlawful behavior, such as predatory sales tactics, false advertising, price fixing, or abusive communications. The Commission—operating on a bipartisan basis and often via consensus—investigates consumer complaints and takes legal action as appropriate to stop illegal practices and deter others from engaging in them. As a result of these actions, consumers enjoy a far fairer, far more reasonable and dependable marketplace than otherwise would exist, and businesses operating fairly and honestly are rewarded with a more level playing field."

At a recent hearing on a variety of FTC-related legislation, Professor David Vladeck, a consumer protection legal scholar and former senior FTC official, testified against a number of bills, including several that have been rolled up together to create the HR 5510 package. We concur with Professor Vladeck's concerns. Take a look at his comments on HR 5093, which has become Section 3 of HR 5510, to time-limit FTC consent decrees, including against firms whose sloppy data security has aided and abetted identity theft, (excerpt):

"The idea that in only five years a company [ASUSTek] that showed stunning disregard for the security of consumers’ home networks could shed its obligations under the decree is unfathomable, but that is a possibility under H.R. 5093 [HR 5010].  In my view, Congress should work to strengthen the FTC’s authority over data security, not weaken it.  Data breaches like the three breaches the Wyndham hotel chain experienced, with more than 600,000 credit card files ending up in the hands of the Russian Mafia, are responsible for the growing scourge of identity theft in the United States, and they are the predictable debris of an Internet economy that places too little value on data security." [material in brackets added]

Of course, a variety of other special-interest legislation, some packaged as policy riders on appropriations bills, also would limit the ability of the FTC, CFPB and other independent and other agencies to protect the public. We are watching these closely as well.

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